Bright outlook for Southern European real estate

Southern Europe's real estate markets are poised for sustained strength, outperforming the broader EU average, according to Savills' latest research.

Share of cross-border investment - Savills

This positive trend is expected to fuel demand from occupiers and boost investor confidence. Oxford Economics forecasts robust GDP growth for 2026, with Spain at 2.4%, Portugal at 2.1%, and Greece at 1.8%, significantly higher than the EU27 average of 1.0%.

In 2025, real estate transaction volumes in Spain, Italy, Portugal, and Greece reached an all-time high of €35 billion, a 24% increase from 2024 levels. Savills attributes this strong performance to several structural factors: an expanding range of investment opportunities, sustained demand driven by tourism, less exposure to e-commerce challenges in the retail sector, and more favourable office and logistics market dynamics compared to many core markets.

Furthermore, energy resilience is emerging as a key advantage for Southern Europe amid a volatile geopolitical landscape. The region's increasing reliance on domestic renewable energy sources is expected to reduce vulnerability to imported energy shocks and provide greater predictability in operating costs for businesses. This, in turn, is likely to support leasing decisions and boost business confidence, particularly in energy-intensive sectors.

James Burke, director, Global Cross Border Investment at Savills, said: “After an exceptionally strong 2025, we expect momentum in the region to continue this year, albeit at a more moderate pace. Investors aren’t just chasing a bounce in the South, they’re underwriting a cleaner demand story and a deeper opportunity set as the Mediterranean shifts from ‘satellite allocation’ to ‘strategic exposure’ in European portfolios.”

Jaime Pascual-Sanchiz, CEO Savills Iberia and Head of Southern Europe, added: “Southern Europe has gained significant market share and sits firmly on cross-border investors’ radar. The region has benefited from a growing, more liquid universe of living sector assets such as care homes, senior housing, and student accommodation, alongside strong hospitality fundamentals underpinned by sustained tourism demand.”